Flipkart may have reached $1 million revenues from monthly ad sales but it is struggling to recover pending dues from advertisers on its platform. According to a report in the ET, Flipkart is planning to file court cases against 20 Indian and foreign companies which have failed to pay for their ads on its platform.
It has already filed the first case against US-based data storage company Western Digital for not paying more than 1 crore for placing ads on Flipkart.
There are about 20 Indian and foreign companies which haven’t paid and the dues are in the range of Rs 90,000 to crores of rupees each.
a person familiar with the development told the ET.
There has not been any response from either Flipkart or Western Digital on the report. We have mailed Flipkart for a comment too, but are yet to receive a response.
Flipkart opened its platform to digital advertising last year when it allowed Product Listing Ads(PLA) on its platform enabling third-party sellers to gain more visibility of their products on its platform.
In March this year, the company disclosed that there were about 24,500 sellers out of 100,000 third-party sellers who had used its ads service with 12,000 sellers using it daily. It also reported reaching $1 billion revenues from monthly ad sales.
Flipkart has also launched a new advertisement platform called Brand Story Ads which would replace the traditional banner ads with interactive story ads. These allow brands to tell their stories in crisp and interactive manner. It has already partnered with over 50 brands such as L’Oréal, Micromax, Gillette, and Sony for these ads.
However, unlike Amazon, Flipkart does not have any prepaid ad payment system for digital advertisers on its platform yet. It relies on getting payments later which has now led this issue to get out of hand.
According to experts, such practices of non-payment or delays are common in the digital advertising industry in India.
There is not any industry body for payment collection yet but according to some media buyers, Internet and Mobile Association of India (IAMAI) is currently setting up a committee to develop a payment mechanism system.
The system will follow up on payments and defaults with advertisers and digital networks regularly on behalf of the digital industry.